The Effect of Information Technology on the Growth of the Banking Industry in Nigeria

The Effect of Information Technology on the Growth of the Banking Industry in Nigeria.

In a presentation by Idowu Etal of department of computer Science, management and Accounting and Computer Science and Engineering respectively all of Obafemi Awolowo University Ife state that the advent of information Technology (IT) is rapidly changing the banking industry.However, a powerful force derives the world towards a converging commonality and that force in technology (Levilt, 1992). From the beginning of human era, technology has been one of the most essential and most important factor.

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From the beginning of human era, technology has been one of the most essential and most important factor for the development of mankind (Coomas etal 1987). During the last two hundred years, technological changes have after been related to economic growth in the form of new types of good and services. Smith (1776) first wrote about technical changes of the three important causes than 200 years ago. Information technology (IT) can be considered as the modern handy of intimation by electronic means, which involves its access, storage, processing, transportation a transfer and delivery (Ige 1995) research shows that it affects financial institution by easily enquiry, saving time, and improving services delivery (Alu, 2000) information technology also provide solution to the needs of modern societies in health care delivery, library services, education and communication networks within organization etc.

Some available telecommunication and information technologies which are presently being using in banking industry in Nigeria are telephone, facsimilie, wireless, radiophone, very small aperture terminal Sal elite  (VSAT), technology and computer system (Ugwu, 1999) Accordingly to Alu (2002) some bank in Nigeria have Loans (Local Area Network) in most of their branches but none of the banks have deployed home banking applications.

INFORMATION TECHNOLOGY AND BANKING IN NIGERIA

As a result of the increased demand for customer, deposit, Nigeria banks, especially the new generation banks, have realized the imperative of good and prompt customer services, Also due to the fact that some customer lost their deposit in the erstwhile technology-insolvent or distressed bank, customers have now become wiser, mere discerning, alert and sophisticated with regards to choosing where it is safe to put their money and where they would be saved promptly, preferable in a pleasant continuous and friendly environment. Thus, they have started looking at the level of service and professionalism of the bank before depositing their funds. Proxunity to the banks is no longer the issue. Safety and the level of services with regard to quality speed and efficiency has become the major imperative. On the part of the banks, they have realized that one way in which they can provide quality services is through the use of technology. Hence there is a growing rate of adopting new technologies in Nigeria banking operations. Moreover, there is growing evidence that customer have started associating quality of services in a bank with the bank’s possession of an online, real-time system. In fact possession of such a system is now judged to be the sine qua non of a high quality banking services in Nigeria so, far a bank to be perceived as providing high quality service, that bank has to have an IT system, which it use to deliver services to customers in a mere truly, friendly and considerate manner, at no extra cost to the customers.

Despite the fact that many of the new generation basic base their marketing strategy on the possession of supposedly on line, real time system, they find that theirs systems links are down for about 50 percent of the time. Many customers feel incessant downtimes. They were promised an online, realtime system only to find out that the bank’s system are down at least half the time, and that the national carrier, NITEL ( Nigeria Telecommunication), is to blame whilst the responsibility of Nitel cannot be deride, many customers still feel that it is the responsibility of the affected banks to take care of these problems, and that they should be given the nationwide, online real time   banking system they were promised. Faced with this dilemma, many banks in the country are desorting to alternative personnal solutions by using the very small aperture Terminal (VSAT) satellite system for long sistance electronic communication for short distance, the MDS( metropolitan Digital services) system is often used. The problem here is that all the banks are trying to procure appropriate VSATS independent of one another. In other words, there is no collaboration between the banks in sourcing this very expensive technology and thereby providing a cast effective solution to the problem. In would also be fair to stay that Nigeria banks are generally imbued with an overly competitive mind-set, which tend to fore-close the benefits of synergy or collaboration is solving mot of their common problem.

As you are aware, telecommunication combine the need for interaction with the application of the technology to facilitate the process of delivery of information. It is important to note that, communication itself, deals with the interchange of information. It is important to note that, communication itself, deals with the interchange of information between two or more parties on an issue or event, such that message from one person is delivered to another from one person is delivered to another person. Communication is said to be effective when all the parties have the same understanding of the issue or events involved. On the other hand, technology which is science- based, provides innovative ways to solving life’s  problems and to helping people clearly understand what is being  communicating. It is therefore imperative that we understand the link between telecommunication and Technology because it presents a vivid picture of their relevance in the banking and financial service delivery.

However, the essence of the use of telecommunication to the delivery of financial services is to enhance the capacity of the operations to solve problem for their customers and other stakeholders. The right perspective is therefore, to ensue that financial institutions do not invest in irrelevant technologies to the detriment of the stakeholders. It is also to ensure that the peculiarities of present day banking practice and the interest of the clientele are considered, when banks embark on the decision to deploy telecommunication and technological innovation in it’s delivery of banking/ financial services.

At this juncture it will good to online some of the advantage of this linkage between telecommunications work to facilitate interaction between people and business organization and, in particular make these transaction mere efficient. We are also aware that some of the performance indications of transaction efficiently include, response time, turnaround time and delivery time all boarding on the timeless of conclusion of transactions. Added to these time- related issues in convenience, especially in these days of modern banking which put tremendous pressure on the operators to carry their services to the deer steps of their customers.

And also, it is obvious hat the use of telecommunication , in the financial sector has helped to drastically reduces or sometimes completely eliminate the need for physical interaction between the banker and his/her customers every time the latter has a transaction to effect. This where ever telecommunication services are available and there is firm and sufficient inter connectively between the service providers, banking can be rendered with little or no hindrance.

Electronic banking or e-banking connotes the form of banking transaction in which both the bank and customer interact electronically, via a telecommunications device, rather than the physical  exchanges or direct physical contact. E banking relies on the existence of adequate operational infrastructure like telecommunication and power. As you are all aware, the introduction of the global system of mobile communications (GSM) has improved the telephone facilities in Nigeria, but the number of lines remains inadequate and far from optimal. The inadequate and supply of telecommunication, infrastructure in Nigeria has therefore result in law usage of internet technology and this, has in turn adversely affected our general acceptance of mobile and electronic banking.

We all recognize that, m-banking and e-banking should be operated on a 24hours in a day, and 7 days in a week, basis however, this cannot be achieved except there is a reliable source of electricity supply. the bring us to the need to develop our infrastructure particular telecommunication for the purpose of imperiling the commitment of the service providers to deliver excellent services as well as in promoting the technical capacity of bankers, to utilize the opportunities offered by technology.

Moreover, the federal government has, however embarked on some for reaching reforms aimed at improving the supply of electricity in Nigeria. Those efforts have  started to yield positive results, which would defiantly help the banks to reduce the cost if financial intermediations as revolutionize baking service in ingeria. However, until the telephone system and supply of electricity in the country are both optimal, some banks that have installed wide area. Networks in order to provide online services to their customers, would have to contend with network failures from NITEL, which are often due to insufficient communication lines, inadequate band width or incessant power failure (Sanus, 2002).

THE INTERNET

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This article was extracted from a Project Research Work/Material Topic

ANALYSIS OF THE EFFECTIVENESS OF INFORMATION TECHNOLOGY ON BANKING SERVICES DELIVERY

(A CASE STUDY OF UNION BANK ENUGU).

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The Effect of Information Technology on the Growth of the Banking Industry in Nigeria

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